March 31, 2014

Omnichannel: WWE

Give this article about the WWE Network a read (click here) - I know, I know, you don't watch wrestling (neither do I), but the article is important to your future.Here's where we are headed, folks.Slowly but surely, we're all being transformed into entertainment networks. We all produce content, always have. But we're heading toward a future where we do more than specialize in just one form of content, and we do more than specialize in one channel of content distribution.The current day version of "omnichannel" is the first step in a thousand step journey. Unfortunately, we're being told that the one step "is" the journey.The future isn't to buy on a mobile phone and pickup in a store.The future is entertainment.Be honest - it isn't entertaining to buy a soldering kit at Radio Shack.Be honest - it isn't entertaining to find out that the Lucca Couture Floral Embroidered Tank Dress isn't available in your size at your local Urban Outfitters store, but can be shipped to your home in two days from another store that is too far away for you to drive to. Do you walk out of the store and do a dance after a transaction like that?It can be entertaining to enter an Apple Store.It used to be entertaining to enter a Barnes and Noble.It used to be entertaining to receive a 500 page catalog from JCP.The future of omnichannel is becoming very, very clear - it's entertainment. It's the "L.L. Bean" Network (LLBN). Or more likely, the Urban Outfitters Network (UON).But let's use the L.L. Bean Network as a starting point. Instead of videos on the website, you have programs on demand. Instead of buy online, pickup in store, the store becomes an entertainment centers. What does that look like? How the heck should I know? Go walk into a Cabellas sometime and start thinking about what it might look like.I know, I know, you're saying "but how could L.L. Bean afford that?" You're saying "they aren't staffed to do something like that". You're saying "even if they did what you're suggesting, the odds of it working are only 5%". Yup, I get it.How much does L.L. Bean spend mailing catalogs a year? Gotta be north of $100,000,000, right?In other words, the old business model was to spend $100,000,000 with the USPS, Printers, and Paper People in order to facilitate a recurring revenue stream of $250 per customer per year. The new "omnichannel" business model will be to spend $100,000,000 creating and distributing content in order to facilitate a recurring revenue stream of $250 per customer per year.This isn't any different than what the WWE is doing. In the old days, the WWE hosted events at arenas, those events represented content shown on cable television, and those events fueled the big pay-per-view events that brought the real profit in the door. Now, the WWE is changing the rules, creating their own network - heck, you can watch a match from 1985 on the network. This network is available on your Xbox or Desktop Computer or Tablet or Phone, 24/7/365, for $10 a month. You're pre-paying for the content.Sound familiar?How many customers pre-pay for your content?What? Customers pay for merchandise, they don't pre-pay in retail?Amazon gets you to pre-pay for content, too (Amazon Prime). And now that you're hooked, the cost of Amazon Prime is going up. Amazon charges you $99 for shipping (and video ... hmmm ... the Amazon Network) ... while we offer free shipping.Interesting.You can see the change happening. Startups work on curated subscription services - the goal of course being a recurring revenue stream. On the other side of the spectrum, old-school continuity programs are thriving among customers age 60+, they get a recurring revenue stream from monthly shipments.We're headed into a world where it is our job to entertain. Maybe it was always our job to entertain. In the 1980s, a 500 page catalog was sufficient to create entertainment. In 1995, the simple act of entering a J. Crew store coupled with a stop at an Orange Julius store was entertaining. In 2005, a functional website was sufficient to create entertainment. In 2015, most of what we'll be doing is boring, listless, dull (requiring discounts/promotions) in comparison to everything else available to the customer. Omnichannel cannot be a sterile, digital customer service solution. It's going to have to be an entertainment network, with each "channel" providing enough entertainment to remain relevant. Why do you read this blog? It has to either entertain you or teach you something, because 99% of you don't hire me for projects.I know, I know. You think I'm nuts. So go ahead and offer your vision of the future in the comments section.

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Kevin Hillstrom, President, MineThatData

Kevin is President of MineThatData, a consultancy that helps CEOs understand the complex relationship between Customers, Advertising, Products, Brands, and Channels. Kevin supports a diverse set of clients, including internet startups, thirty million dollar catalog merchants, international brands, and billion dollar multichannel retailers. Kevin is frequently quoted in the mainstream media, including the New York Times, Boston Globe, and Forbes Magazine.

Prior to founding MineThatData, Kevin held various roles at leading multichannel brands, including Vice President of Database Marketing at Nordstrom, Director of Circulation at Eddie Bauer, and Manager of Analytical Services at Lands' End.

You may contact kevin at kevinh@minethatdata.com.

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